Barclays abandons battle for ABN Amro

Barclays accepted the inevitable today and conceded defeat in the seven-month battle for ABN Amro.

The Dutch bank now looks set to fall into the hands of a consortium led by Royal Bank of Scotland, which outgunned Barclays to clinch the world's biggest bank takeover.

RBS and its partners, Santander of Spain and Fortis, the Dutch/Belgian bank, wrecked Barclays' carefully planned takeover mostly in shares with a cash bid worth £49bn.

Barclays' chief executive, John Varley, saw victory ebb away after bank shares began to slip in mid-August following fears of a global credit crunch. He brought in two investors late in the day to add a cash element to the deal, but even the might of the China Development Bank and the Singaporean government investment fund Temasek were unable to boost the bid sufficiently.

The result was an offer from Barclays that fell almost £7bn short of its rival.

Mr Varley was upbeat about the bank's growth prospects and said the board would maintain its current growth strategy.

He said the merger protocol with ABN was terminated, and that he was requesting payment of the 200m (£135m) break fee, which would "significantly exceed the costs that Barclays incurred in connection with the offer".

The bank also said it would restart its buyback programme, with up to £1.55bn available to purchase a maximum of 196m shares for cancellation.

The consortium is expected to announce the results of an ABN shareholder vote on its bid on Monday, and to declare its offer unconditional by the end of next week.

Unions said they would hold the consortium to pledges made during the bid battle to safeguard jobs. Unite, Britain's biggest union, called on the RBS consortium to honour its commitment to safeguard workers' jobs in the event that their hostile bid for ABN Amro goes ahead.

The consortium has already signalled that up to 19,000 jobs will go if their takeover is successful.

Unite's deputy general secretary, Graham Goddard, said: "Unite will be holding the RBS consortium to account on their worker commitments. We have told the banking consortium which plans to break up ABN Amro, that the international trade union movement will hold them to account over their commitments to safeguard workers' jobs following the hostile takeover.

"We give a cautious welcome to the assurances on growth given by Barclays in its statement today, in what is an uncertain time throughout the industry. We will be looking to continue developing our positive relationship with Barclays in the UK, and elsewhere, particularly with a view to realising a global framework for trade unions throughout the world where Barclays operate."